Coronavirus: Global stocks sell-off on fears of second COVID-19 spike

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
UK prime minister Boris Johnson in his television address to the nation on Sunday evening. (Andrew Parsons/10 Downing Street vía AP)

Global stock markets lost momentum on Monday, as fears about the COVID-19 pandemic and its economic impact continued to swirl.

Stocks across Europe had opened higher, with the FTSE 100 (^FTSE) the best performer.

The bluechip index in London rose 0.6%after prime minister Boris Johnson announced tentative easing of the UK’s lockdown. Construction and manufacturing staff were told to go back to work from this week, while non-essential shops and schools could re-open in June if infection and death rates improve. Restaurants could follow in July.

“This is a long road to bring life back to its normal level but the good news is that we are finally exiting the lockdown and some part of economic activity will resume,” said Naeem Aslam, chief market analyst at Avatrade.

Stock markets across continental Europe also opened higher and futures pointed to a positive open in the US. But sentiment soured as morning turned to afternoon and US stocks opened lower.

After 15 minutes of trade, the S&P 500 (^GSPC) was down 0.5% and the Dow Jones Industrial Average (^DJI) was down 0.7%. The Nasdaq (^IXIC) was flat.

The shifting momentum was particularly sharp in Europe. By mid-afternoon, the DAX (^GDAXI) was down 1.3% and the CAC 40 (^FCHI) fell 1.5% in France. Both indexes had started the day in the green.

The sell-off came as investors mulled the prospect of a second spike in COVID-19 infections caused by easing lockdown restrictions.

READ MORE: Coronavirus: Johnson's call to return to work 'recipe for chaos'

US president Donald Trump is pushing for restrictions to be eased even as COVID-19 deaths in the US look set to pass 80,000 and the White House battles an outbreak within its own ranks.

In Germany, where restrictions have already been eased, the closely watched R number — the rate of reproduction for the virus — has climbed above 1, sparking fears that restrictions may have to be re-introduced in Europe’s largest economy.

“As economies open up, investors will be concerned about whether it's possible to avoid a significant threat of a second wave,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

In Asia, stocks largely rallied overnight. Japan’s Nikkei (^N225) rose 1%, the Hong Hang Seng (^HSI) climbed 1.4%, and China’s Shanghai Composite (000001.SS) was flat. South Korea’s KOSPI (^KOSPI) fell 0.5%. Fresh COVID-19 outbreaks have been recorded in Wuhan, China, and South Korea.